Difference Between Single And Head-Of-Household

The difference between single and head of household tax filing statuses can have a significant influence on the taxes you owe and the return you receive.

However, many people need to be made aware that they may be eligible for the more advantageous head of household position, which has greater standard deductions and, in many cases, reduced taxes.

Taking the effort to grasp the distinctions could result in hundreds, if not thousands, of dollars in extra cash. A financial expert can help you choose whether head of household, single, or another status is best for you.

What is Single Filing Status

A taxpayer files their tax returns using the single filing status if they are single and do not meet the requirements for any other filing status. As to the IRS, an individual filing taxes alone is deemed single if, on the last day of the tax year, they are either unmarried, divorced, or separated from their spouse by any legal decree.

Additionally, a person may still qualify as single for tax purposes if they are married but did not live with their spouse for the last six months of the tax year.

What is a Head of Household

To qualify for the head of household tax filing status, a person must file their tax return separately as an individual. They should also be eligible for the exemption for a qualified individual and be regarded as single.

If a taxpayer is single, divorced, or unmarried on the last day of the tax year, they are considered unmarried for the entire year. Married taxpayers may also be deemed single if they did not reside with their spouse for the final half of the tax year.

Typically, the qualified individual is the taxpayer's child or parent, for whom the taxpayer has paid more than half of the qualifying individual's housing and support expenses.

What Are the Benefits of Filing as Head of Household?

Filing as the head of household has two key advantages over filing as a single filing:

• A greater portion of your income is subject to lower tax brackets.
• The amount of your standard deduction rises.
• A larger standard deduction combined with lower tax brackets can significantly reduce your tax liability if you meet the requirements for head of household filing status.

What Makes Someone Eligible for Head of Household?

There's more to filing as Head of Household than just crossing something off a list. To claim this status, you need to fulfill a few prerequisites. Always get advice from a tax expert if you need clarification.

To become Head of Household, you have to:

• Be single.
• Contribute at least 50% of what it costs to run a home.
• Possess a qualified dependent who resides in your home and for which you are financially responsible for half of the year.

You must fulfill each of the requirements to file utilizing the Head of Household status. You must use single status while filing your tax return if you only miss one.

It's a good idea to keep track of how you adhere to the Head of Household regulations. The IRS may contest the status of your tax return.

If you cannot prove that you meet all the requirements for Head of Household, the IRS may change your status to Single. This could mean paying additional taxes in the end. It's a good idea to maintain current and accurate financial records.

This procedure can assist you in better tracking and managing your finances all year long, as well as in proving that you filed your taxes on time in the unlikely event that the IRS audits you.

Difference Between Single and Head of Household

Conclusion

The choice of tax filing status extends beyond a person's marital status. By having higher standard deductions and more advantageous income tax rates, being eligible for head of household status over single filer status can result in significant tax savings for single taxpayers who are unmarried and have dependents.

But a lot of eligible taxpayers declare themselves single without looking into other choices. To prevent overspending, first, learn the main distinctions between filing as a head of household and as a single person, evaluate the requirements for each, and choose the strategy that will work best for your tax circumstances. The answers you provide on a single form entry box could mean that hundreds or even thousands of dollars are at risk.